Review of The Color of Law by Richard Rothstein, The New Urban Crisis by Richard Florida, and No Place Like Home by Brian McCabe.

The Big Short and the Long Denial

In 2015, the film The Big Short dramatized and memorialized the US housing crisis of the late 2000s. With a compelling screenplay and a cast of A-list actors, the film received positive reviews and numerous award nominations. Stars no less than Christian Bale, Brad Pitt, and Ryan Gosling wrestled with the financial gains and attendant ethical depravity of predatory loans that ultimately contributed to the housing crash. In light of the success of The Big Short, one wonders when the screenplay will arrive for the century-in-the-making scandal that has privileged white home ownership at the expense of racial minorities in the United States. It could end up being a classic "whodunit" that reveals an unexpected mastermind: policy.

Of course, the complexities of the 2008 housing crash required a careful distillation by Margot Robbie in a bathtub to maintain viewers' attention in The Big Short. With that in mind, it remains doubtful that any film titled The Long Denial of Non-white Home Ownership could begin to sexily unpack the decades-long complications of government-supported policies that ensured white home ownership: redlining, restrictive covenants, exclusionary zoning, steering, block busting, and the manipulation of public housing. And yet this largely hidden history of aggressive interventions and lax omissions on the part of the government demands to be told, and culprits held accountable. Their fingerprints remain all over the current landscape, waiting to be lifted from the entire urban and suburban landscape of the United States. Moreover, three recent books, The Color of Law (Richard Rothstein), The New Urban Crisis (Richard Florida), and No Place Like Home (Brian McCabe) could be entered into evidence for the prosecution.

The Urban Crisis That Spawned the 1967 Riots

July 2017 marked a half century since scenes of civil unrest in cities across the United States became so damaging and, in some cases, so deadly that the federal government had no choice but to take notice. President Lyndon Johnson commissioned the National Advisory Commission on Civil Disorders (eventually just known as the Kerner Commission) to better understand the catalysts for these sometimes days-long uprisings. Among its findings, the commission reported that a key ingredient leading to such volatility in US cities in the late 1960s included residential segregation based on race. And perhaps the key quote from the commission: "What white Americans have never fully understood but what the Negro can never forget—is that white society is deeply implicated in the ghetto. White institutions created it, white institutions maintain it, and white society condones it."

Individual choices and the free market did not create residential segregation in US cities. Rather, institutions that included the FHA, the FDIC, and the Federal Reserve played key roles in shaping the colour-shaded patchwork metropolis.

While acknowledging the complexities of the uprisings, the commission considered it "clear" that the most fundamental cause of the unrest was "the racial attitude and behavior of white Americans toward black Americans." They concluded: "Race prejudice has shaped our history decisively; it now threatens to affect our future." The commission, though, failed to articulate the primary role of government policy in fostering the African American "ghetto." Perhaps most striking, the commission concluded that participants in the disturbances expressed frustration because they wanted fuller participation in the material benefits enjoyed by white society. With that in mind, the commission asserted that home ownership functioned as the broadest pathway to strong citizens—thus they assumed that homeowning citizens would hesitate to riot. Of course, the commission likely failed to fully understand that the government itself had been systematically denying African American home ownership. In any case, the Kerner Report has become infamous for the shrug of dismissal it received from the Johnson administration.

The Social Construction of Home Ownership and de Jure Segregation

Today, the same accepted wisdom that homeowners make better citizens receives little scrutiny. However, sociologist Brian McCabe explores the unquestioned and unrelenting advocacy for home ownership in No Place Like Home. McCabe demonstrates that home ownership became a hallmark of US housing policy only in the early twentieth century as government officials, in collaboration with national real estate organizations, campaigned to promote the notion that the decision to buy (rather than rent) led to better neighbours, better citizens, better Americans. Realtors, of course, found motivation in enhancing their bottom lines. Political leaders, though, viewed home ownership as an antidote to social unrest and political disruption in US cities. Later, during the Cold War, home ownership would be seen as a strategic method for inhibiting an individual's communist tendencies. McCabe quotes a senator from New York who expressed the patriotic impulses assumed to be associated with home ownership: "Where there is a community of homeowners, no Bolshevists or anarchists can be found."

However, according to Richard Rothstein (The Color of Law), the government seemed less sanguine about whether home ownership could instill those values in African Americans. Many acknowledge the problem of segregation in US cities. But because Americans tend to hold almost creedal beliefs in free markets and choice, they also assume that it mostly owes to self-sorting and the phenomenon of "like attracts like." Not so, according to Rothstein. Instead, we now live with the severe, enduring effects of de jure segregation. That is, African Americans have suffered from state-sponsored, unconstitutional efforts to deny them their rights to buy homes or even rent in an effort to integrate middle-class neighbourhoods.

Rothstein documents an egregious case when the Chicago Housing Authority attempted to build public housing projects in some predominantly white areas. In response, President Gerald Ford's solicitor general, Robert Bork, expressed the federal government's opposition to locating public housing in white areas: "There will be an enormous practical impact on innocent communities who have to bear the burden of the housing." Thus, Rothstein explains, the federal government argued that non-discriminatory housing policy could be viewed as a mistreatment of the innocent—and, of course, "the innocent" acted as a code for white.

In addition, local zoning practices frequently allowed industry and liquor stores near African American neighbourhoods—but typically prohibited the same entities as violations near white neighbourhoods. No less than the leading authority on administrative law in the 1920s, Ernst Freund, described early zoning as an effort to prevent "the coming of colored people into a district." More than that, though, Rothstein notes that when the Federal Housing Administration (FHA) developed the insured amortized mortgage as a method of increasing home ownership, these zoning inconsistencies rendered most African Americans ineligible because the proximity of their homes to commercial development "jeopardized" property values.

Rothstein also cites the US Commission on Civil Rights' 1973 conclusion that the "housing industry, aided and abetted by Government, must bear the primary responsibility for the legacy of segregated housing. . . . Government and private industry came together to create a system of residential segregation." Individual choices and the free market did not create residential segregation in US cities. Rather, institutions that included the FHA, the FDIC, and the Federal Reserve played key roles in shaping the colour-shaded patchwork metropolis.

In a significant case that should have made housing more open, the Supreme Court ruled in 1917 in Buchanan v. Warley against racial zoning in Louisville, Kentucky. But Rothstein details how thereafter numerous suburbs simply adopted exclusionary zoning policies that offered only oblique, coded language to conceal the racial targets—but ultimately realized the same effects. For example, in a 1926 case, the Supreme Court considered the constitutionality of zoning that prohibited the siting of apartment buildings in single-family neighbourhoods. In upholding the prohibition, the court explained that "very often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district." However, "rental units" and "apartment houses" continued to function as codes for racial minorities.

It could be argued that federal government spends thirteen times as much on home ownership subsidies as it does on “housing assistance to those in need

In another example of government-sanctioned residential discrimination, Rothstein relates how FHA appraisers not only "gave higher ratings to mortgage applications if there were no African Americans living in or nearby the neighborhood but also lowered their risk estimates for individual properties with restrictive deed language" that prohibited sales to racial minorities. In fact, the agency produced manuals to systematically recommend "explicit prohibition of resale to African Americans."

The New Urban Crisis: Same as the Old Urban Crisis

In a flip of the script, white elites have begun a selective return to cities. While it seems like the much-documented recent urban renaissance will push the poor and racial minorities to inner-ring suburbs, scholars also argue that in places like Detroit, heralded for its return from bankruptcy, only 7 of the city's 143 square miles elicit any sense of revival. Similarly, recent research on Chicago estimates that only 9 of the city's 77 neighbourhoods could be classified as having experienced gentrification—and all 9 benefitted from proximity to downtown and having been historically white in the first place. Urban planning professor Richard Florida (The New Urban Crisis) notes that the likelihood of a neighbourhood's gentrifying declines as the proportion of African American residents increases. In short, "the great bulk of poor black neighborhoods remain virtually immune to gentrification, with their residents remaining largely trapped in chronic and persistent poverty." Furthermore, for every census tract that could be categorized as gentrifying between 1970 and 2000, 10 remained "poor" and 12 that had been deemed "stable" had slipped into "concentrated disadvantage." Thus, in many ways, the "new" urban crisis remains the same as the "old" urban crisis: those with the means to live in the most privileged places do so at the expense of those who cannot—and with the government's collusion.

While abandonment of cities (white flight and deindustrialization) precipitated the urban crisis and resulting civil unrest of the late 1960s, our present predicament involves revivified urban centres and, again, a limited access to the desired housing and places. Tech-startup investments have also exacerbated urban divisions. Venture capital has a tendency to locate now in dense, walkable urban zip codes. In fact, Florida notes that "the amount of venture capital invested in startups is more strongly correlated with population density than it is with either the concentration of the highly educated people or the concentration of the creative class." In addition, the back-to-the-city movement has thus far yielded extremely limited benefits, enjoyed disproportionately by a small share of people and places (both already privileged). While still trumpeting the central role of his Creative Class, Florida laments that they stand as the minority that has reaped the most from the urban revival. Meanwhile, the remaining two-thirds of the urban population who languish as blue collar or service workers can only watch as the talented and advantaged cluster in ever more exclusive places in this new form of "winner-takes-all urbanism."

The new urban crisis, according to Florida, includes the growing economic vitality of superstar cities (New York, San Francisco) and places that leave all other cities and places behind. The crisis of success that induces remarkably unaffordable housing and vexing levels of inequality—where gentrification no longer adequately describes the revival and displacement to the point that it is probably best described as plutocratization or oligarchification. In addition, the revitalization of only certain, concentrated places within cities has led to a "patchwork metropolis" where leaders promote swatches of privilege while ignoring swaths of poverty and distress.

The domino effect of urban rebirth includes the push of the crisis into suburbs. We should be disabused of any Brady Bunch images we hold of idyllic suburbs. While those surely still exist, the suburban scene has grown much more complex in the early twenty-first century: we now know during the first thirteen years of this century that the ranks of the suburban poor outpaced those in cities: while the urban poor grew by 29 percent, the suburban more than doubled that, coming in at 66 percent—a figure Florida describes as "staggering."

Exacerbating the Crisis with Homeowner Entitlements

The new urban (and now suburban) crisis owes much to an unbalanced housing policy. Rothstein, Florida, and McCabe all identify federal policy exacerbating the lack of affordable housing in the United States—and currently making cities more contentious places. Florida notes, "The federal government provides an estimated $200 billion in annual subsidies for home ownership via tax deductions for mortgage interest." The deduction has remained remarkably popular, to the point that McCabe describes it as "one of the most sacrosanct public welfare programs." More than that, if we account for indirect expenses, it may be that the subsidy costs the federal government as much as $600 billion per year. Calculated in this manner, it could be argued that federal government spends thirteen times as much on home ownership subsidies as it does on "housing assistance to those in need ($46 billion a year)." Rothstein corroborates that claim, noting that the popular rental assistance subsidy known as Section 8 functions not as an entitlement—in fact, the budget remains far too meagre: in 2015, while one million families used the vouchers, another six million qualified but went without because of insufficient budget appropriations. The tax deduction for property taxes and mortgage insurance, however, does act as an entitlement given "to middle-class (mostly white) homeowners" because it has no budgetary limitations.

More than that, the weight of the tax advantage tips the scale for those who likely already have substantial wealth: the policy allows homeowners to deduct interest paid on mortgages up to $1 million. With loans that large, it should come as no surprise that the top 20 percent income earners in the United States benefit from 75 percent of these subsidies—while the top 1 percent manage to accrue 15 percent. Another way to think about the regressive nature of mortgage interest deduction: households that make more than $200,000 annually (less than 5 percent of all US households) reap roughly 35 percent of the benefit. Perhaps without knowledge of the disproportionate way in which the wealthy harvest this tax policy, nearly two-thirds of Americans oppose efforts to eliminate or reform this entitlement.

“When they prioritize property values over other community issues, homeowners contribute to the politics of exclusion by narrowing opportunities for robust political discussions, reinforcing symbolic dimensions of segregation in their neighborhoods.”

Of course, that opposition might be due to the slow rending of the United States' social safety net. The steep reductions in government-funded social programs that began during the Reagan administration, according to McCabe, have also forced more and more Americans to utilize their homes as a form of private insurance: "We can think of housing investments as a substitute for a safety net that would otherwise be provided by a more generous state or through employer-provided benefits." With the attrition of social policies in recent decades, Americans have relied increasingly on the appreciation of their homes to buffer economic insecurity.

Nimbyism and the Narrow Bandwidth of Homeowners' Concerns

However, McCabe also interrogates the taken-for-granted wisdom of government intervention to promote home ownership. It seems a compelling argument that personal investment in a home would lead to greater social involvement in the broader community. Further inspection, though, reveals such an assumption regarding motivations for community investment to be deeply cynical: homeowners only engage in broader community/neighbourhood issues to protect or enhance their home's value.

Indeed, McCabe reports a "dark side" of homeowner participation in their communities. Not all civic engagement contributes to the "formation of more inclusive, democratic communities." In fact, some forms of public participation function as tools for the maintenance of existing structures of inequality and further entrenchment of the "boundaries of power" in neighbourhoods. When homeowners participate with the primary goal of enhancing the value of their homes, they frequently exacerbate the lack of affordable housing by restricting the possibilities for creating more inclusive communities. For instance, at least a component of the affordable housing crises in cities like San Francisco and New York rests with the resistance of homeowners to the construction of rental units. "When they prioritize property values over other community issues," McCabe concludes, "homeowners contribute to the politics of exclusion by narrowing opportunities for robust political discussions, reinforcing symbolic dimensions of segregation in their neighbourhoods."

Similarly, Florida describes the development of "winner-take-all urbanism," where the elite cluster and colonize the most sought-after locations, leaving behind everybody else in every other place. Florida asserts that this has become the "central crisis of our time." Once in position, those who have secured a home in these exclusive places engage in virulent forms of Nimbyism that receive government support from what Florida labels as the New Urban Luddism: a codification of zoning laws and land-use regulations that intentionally seek to restrict the supply of housing. In this case, instead of fearing the economic ravages of weaving machines, the New Urban Luddites slam their metaphorical hammers against development they see as threatening to their property values.

By intentionally limiting apartments and density, these policies have debilitating ramifications for those who fail to have the means to own. In the competition for desired locations, we see the "Christopher Columbus Syndrome": a neo-colonialist land grab. Florida describes the phenomenon: "As the advantaged groups colonize the best neighborhoods, they gain access to the most economic opportunities, the best schools and libraries, and the best services and amenities—all of which compound their advantages and reinforce their children's prospects for upward mobility. The less advantaged are shunted into neighborhoods with more crime, worse schools, and the dimmest prospects for upward mobility. Simply put, the rich live where they choose, and the poor live where they can." These developments have, in turn, led to "Zip Code Destinies." That is, life chances in the United States have become dependent on where a person happens to be born and raised—and evidence demonstrates that those places have been manufactured, to a significant degree, with a governmental blessing.

The Big Short Only a Component of the Long Denial

Predatory lending catalyzed the events depicted in The Big Short. The racially charged component of subprime loans, however, never made it into the script. Rothstein reports that predatory lending data suggests a pattern based on race: "Lower-income African Americans were more than twice as likely as lower-income whites to have subprime loans, and higher-income African Americans were about three times as likely as higher-income whites to have subprime loans." True to form, when it became aware of these patterns in 2005 (in its own research reports), the Federal Reserve violated the legal and constitutional rights of African Americans by failing to address this discrimination.

Ultimately, the three books demonstrate that government policy had been choosing winners and losers for decades. The de jure policies of the government protected white relocation to and investment in the suburbs during the Cold War era. In turn, the early years of this century have seen an elite revitalization of urban cores also abetted by government policy.

All three volumes detail how broad indifference to a true common good and racially primed policies have had catastrophic consequences for cities—and, now, suburbs. Unchecked, these same tendencies have adapted and morphed to ensure that the infection and denial for some will continue to fester—even as cities seemingly revitalize. Thus Florida's new urban crisis rests on the legacy of historical government policy as explained by Rothstein and McCabe. More than that, though, the current crisis centres on the increased economic isolation and insecurity of less advantaged urbanites and suburbanites. By actively intervening to safeguard certain properties, government has functioned as the linchpin in that spatial segregation and resulting inequality throughout metropolitan regions. Taken as a whole, these three books elucidate a century-long scandal that has produced consequences likely as dramatic and as enduring as those depicted in The Big Short. This stories deserves the same attention—and outrage.

Dr. MarkMulder, professor of sociology, teaches classes ranging from Church and Society to Urban Sociology to Diversity and Inequality and is director of the urban studies minor at Calvin College, Grand Rapids, Michigan. He is the author of Shades of White Flight (Rutgers University Press) and co-author of Latino Protestants in America: Diverse and Growing (Rowman & Littlefield). His research finds focus at the intersection of cities and congregations.